BARCLAYCARD is writing to 100,000 customers with details of an experimental "Combinations" product which combines the features of a card and loan.

It allows customers to move their card balance into a separate loan "pot" with a lower interest rate and the option of a fixed repayment.

Each month, the minimum payment comprises 3.0 per cent of the card balance plus the loan repayment and once the minimum payment has been made, customers can further reduce their card or loan balance as they choose.

Barclaycard's Keith Coulter said: "This is a new idea which we believe offers a fair deal, encourages responsible borrowing and addresses some of the criticisms that have been levelled at the credit card market."

Independent observers, however, are not convinced it's all good news. Nick White of uSwitch.com said: "It is clearly an innovative product and the option of being able to transfer a credit card balance three times a year into a separate loan pot is certainly appealing for spenders who don't clear their balance at the end of each month.

"They should be aware, however, that shifting the balance from the card to the loan pot may serve only to create a false comfort zone as spenders are less inclined to pay off the new balance.